Management Information System Case Study for "Dirt Bikes USA"

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Dirt Bikes USA

Case Study

Chapter 1Management Overview of Dirt Bikes

Introduction of Dirt Bikes

Dirt Bikes USA, a small company headquartered in Carbondalewas founded in 1991 by Car Schmidt and Steven McFadden, two young but experienced bikers with engineering backgrounds who saw that dirt bikes were becoming very popular in the Unites States as both sporting and racing motorcycles. In the early time, they developed frames for dirt bikes that were more suited to off-road handling and used it as a model to build their own dirt bikes models by using motorcycle engines manufactured by other companies, such as Honda and Rotax Motors of Austria. When Steven got the first place in a race, other peoples began to very interested in their products. Both young men realized that they had an opportunity to enter into dirt Bikes market. They opened a small production facility in Carbondale which has since expanded to house 120 works involved in production, designand engineering and a corporate sales and administrative staff of close to 20 employees.

As experienced racers, they understand that the quality is the life of products. They have made a goal as the market leader to supply the best dirt bikes by using the best components.

From the beginning, the company gathered some experienced and enthusiasm young bikers. Same interest created a warmly and friendly family working environment, encouraging teamwork, attention to detail and quality, and continual learning and innovation.

Products and Services

Dirt Bikes always focus on the quality of its products. They design the frame by themselves and fit it with the best parts from the world. Over the years, they have extended their products from racing to off-road recreational use. Currently, Dirt bikes can supply four models:See Figure 1.1



Enduro 250 3250 Cross-country racing kick and electric starters,

Enduro 550 7600 Cross-country racing steering stabilizers,

Moto 300 4295 motocross racing in an liquid cooling

Moto 450 8995 enclosed dirt course

Sales and Marketing

Dirt Bikes does not directly sell to retail customers. It relies on a network of 40 distributors concentrated in the Western and Midwestern United States. A small percentage of Dirt Bikes are sold in Europe by independent distributors. If a potential customer lives more than 50 miles from nearest authorized Dirt Bikes dealer, the customer can purchase a Dirt Bike or parts through a certified independent motorcycle dealer. Retail customers can purchase spare parts directly from Dirt Bikes only by verifying that they live more than 50 miles from an authorized Dirt Bikes dealer.

One of Dirt Bikes sales department responsibilities is to aggressively promote Dirt Bikes at dirt bike racing and other events, except close cooperating with their distributors. Dirt Bikes uses a small public relation firm to place articles about new products and the company' story in the magazines.


Figure 1.2 Organization Chart

Dirt Bikes USA, owned by Carl as CEO and Steven as COO, use "flat" organization structure to manage its business. There are 3 managers in production, administration and sales & marketing departments. Totally, there are 10 employees working in administration, like controller, accountant, administration assistant, human resource, secretaries and information systems specialists. Others work in manufacturing department. (See Figure 1.2)

Situation in Dirt Bikes

In 2002, Dirt Bikes faced losing profit to 1,444,000 US$ (See Figure 1.3). The problem is caused by dropping sales revenue and increasing in operating expense. This situation has lasted for two years. Sales revenue decreased from 2001 to 2002, either domestic or international. Especially, international sales declined 14.39% in 2002.(See Figure 1.4 and 1.5)

Figure1.3 shows Gross Margin and Net Margin in Dirt Bikes from 2000 to 2002. Either gross margin or net margin has declined over three years. Especially in 2002, declining rate in gross margin reached to 9.4% and rate in net margin reached to 13.8%. Meanwhile, the sales revenue decreased 6.1%. However, Dirt Bikes' cost increased too quickly to almost 10%. (See Figure 1.5 and 1.6)

Figure 1.3 Statement of Income over three years

Consolidated Satements of Income (in 000')

2002 2001 2000


Net sales 60,144 64,063 61,529

Cost of goods sold 45,835 43,155 41,072

Gross profit/(loss) 14,309 20,908 20,457

Gross margin 23.00% 32.60% 33.24%

Operating expenses

Sales and marketing 4,733 4,537 3,944

Engineering and product development 3,141 2,992 2,339

General and administrative 1,913 1,601 1,392

Total operating expenses 9,787 9,130 7,675

Operating income/loss 4,522 11,778 12,782

Other income/expense

Interest income/expense 1,747 175 80

Other income/(expense) -6,254 -2,914 -3,080

Income before provision for income taxes 15 9,039 9,782

Income taxes 1,459 1,729 535

Net income/(loss) -1,444 7,310 9,247

Net margin 2.40% 11.41% 15.03%

Figure 1.4 Domestic VS. International Sales

Figure1.5 Cost of goods sold-Sales revenue Ratio over three years

2000 2001 2002

Sales 61,529 64,063 60,144

Cost of goods sold 41,072 43,155 45,835

Rate (100%) 66.75 67.36 76.21

Figure1.6 Cost of goods sold-Sales revenue Ratio over three years

2000 2001 2002

Sales 61,529 64,063 60,144

Cost of goods sold 7,675 9,130 9,787

Rate (100%) 12.47 14.25 16.27

Situation in sales

Sales in two models, Enduro 250 and Enduro 550, are reduced, especially in Enduro550 to 10.57%. Other both Moto models increased steadily. (See Figure 1.7)

Figure 1.7 Sales amount by Model

Model 1998 1999 2000 2001 2002 2001VS.2002 RATE

Enduro 250 1201 1662 2291 2312 2195 -117 -5.06

Enduro 550 2832 3290 3759 4078 3647 -431 -10.57

Moto 300 1755 1932 2454 2615 2627 12 0.46

Moto 450 463 598 661 773 823 50 6.47

TOTAL 6251 7482 9165 9778 9292 -486 -4.97

Despite Dirt Bikes lost money in 2002, Dirt Bikes still has plenty of capital that allow it to increase its performance through investment in new projects and information systems. Facing the intensely competition environment and digital society, top managers in Dirt Bikes should make right decisions to transform Dirt Bikes from traditional business firm to digital firm which can increase the effectiveness and efficiency of the productivity along with declining in the cost. Dirt Bikes should install a wide of information systems to support its design, purchase, manufacture, sales and service, example supply chain management systems, customer relationship management systems, enterprise systems and knowledge management systems.

Chapter 2 Identifying Supply Chain Management Solutions for Dirt Bikes USA

Dirt Bikes should transform its supply chain to provide products and services quickly, they should reappraise the supply chain and try to eliminate redundant steps, delays, and the amount of resources tied up along the way.

Two potential companies, Whitney Fuel Tanks of Automotive Parts Supplier and Moyer Fuel Tanks Supplier in Colorado, could be its suppliers.

Table 2.1 Compared the shipping cost of Fuel Tank

Name Lead Time Cost

JC Whitney overnight 20US$

2days 25US$

Honda 3days 40US$

Whitney will be the fuel tank supplier due to low shipping cost and short lead time (See Table 2.1)

LANSA and ITBIZ can offer supply chain management software to Dirt Bikes. The analysis of the capabilities of two pieces of software is as following:


· Rapidly communicate orders and product design

· Check inventory availability and monitor inventory levels

· Track the status of orders and shipments are delivered at the 24 hours and place at the minimum cost.

· Plan production based on actual customers demand and provide 24 hours online customer service


· Decide when and what to produce, store, and move

· Reduce inventory, transportation, and warehousing costs

Dirt Bikes can choose LANSA as its supplier for supply chain management software that will offer the quickest way for a major developer to implemented the online order and parts information system. This system can reduce 30% of unproductive labor and turn that into productive labor. Rather than dealing with standard orders, employees can spend more time on dealing with difficulties suppliers. Also, it can decrease the amount of the delay-order that will cause the operating to stop.

In addition, this system can help Dirt Bikes to save the cost of purchase.

Chapter 3 Performing a Competitive Analysis for Dirt Bikes

Competitive Analysis by value chain model

l Inbound Logistic

Automated warehouse system - eliminate order delay due to the running out of the parts and components, reduce the numbers of parts in store house that can save costs, increase the distributors' satisfaction with Dirt Bikes

l Operations

Computer-controlled machine systems - increase the effectiveness and efficiency of productivity, save the cost of labors,

l Sales and Marketing

Computerized ordering systems - reduce the sales costs, easily lock the target market to

increase the sales, enhance the relationship with clients, widely and quickly gain the

information about their competitors to improve the competition, response to customers fast

l Service

Enhance customer' satisfaction with Dirt Bikes to increase the sales, assist design and engineers to improve the quality by offering correctly information about he problems on their products,

l Outbound Logistic

Automated shipment scheduling system -- increase the effectiveness, avoid the delay to increase customer' satisfaction with Dirt Bikes

l Design and engineering: Design some suitable frames to customer to attract customers

Competitive Analysis by competitive forces model

l Customers: High

There are a lot of competitors in the market, such as Honda, Suzuki, Yamaha. The clients can easily switch to competitor's products due to lower price

l New market entrants: High

Easily find the part' suppliers to help them fit them to a final products

l Suppliers: Medium

Some suppliers have low powers because there are a few same suppliers. But some suppliers have high powers, like Honda and Rotax that supply the best quality components in the world. In addition, Dirt Bikes is a small client to them. Maybe, they do not care to loss a customer like Dirt Bikes. From both sides, suppliers have medium power on hand

l Substitute products and service: Low

These motorcycles are as tools of racing that can not be substitute.

l Competitors: High

They have the advantage on price and models, example: Honda, Suzuki and Yamaha, especially the large competitors lower their price of products that will affect the industry to eliminate some small companies. (See Figure 3.1). These competitors have technical in advance and more technical support.

Figure3.1 Price range for several suppliers(US$)

Dirt Bikes Honda Suzuki Yamaha

Price 3,250-8,995 1,099-5,999 1,099-5,499 1,079-6,499

Amount of Models 4 above 10 above 10 above 10

Target Market Athletes, above 18 old Athletes, above 15 old

Feature Suited frame easily adjusted design to meet different

condition courses, more power power

Competitive strategy by Dirt Bikes:

Using information management systems on supply management, operation, sales, management, Dirt Bikes could improve the quality of products, lower cost of products, attract more customers and enhance competition.

Chapter 4 Developing an E-Commerce Strategy for Dirt Bikes

For improving its own efficiency and productivity, Dirt Bikes should move its internal and external business processes on the Web. Dirt Bikes should sell motorcycle and parts over the Web. Also, Dirt Bikes should use its Web site primarily to advertise its products and services. It can gain lot of benefit for it as following:

- Increase the number of potential customers who browse Dirt Bikes' Web

- Save cost of market through pose its broaches on Web that achieve the purpose of advertisement

- Quickly gain the feedback about its products and sales to assistant managers to make right-decision for future

- Easily lock target market to possibly enhance the sales revenue and new products or service

- Reduce the cost of transaction and administration

- Target customers demographic

Cost of Dirt Bikes e-commerce web site is:

Software: $250

Hosting web: $100

Data transactions: $150

Maintenance and data entry: $100

Purchase basic hardware: $2000

Total direct cost: $2600

Dirt Bikes should use the Web to offer the following item to clients:

- Provides motorcycles or parts over the Web.

- Uses its Web site primarily to advertise its products and services.

- Uses the Web for customer service

- Provides online meeting place where peoples with similar interests can communicate and find useful information.

Value got by Dirt Bikes from Web:

- Save money by reducing employee's travel time

- Completely understand the requirement of end user

- Increase the effectiveness and efficiency of service

- Enhance the end user' satisfaction with Dirt Bikes' by quick respondency to them

- Reduce the cost of the sales and market

- Save the cost on labors

- Expend the sales channel

Revenue return:

- Dirt Bikes can increase the sales revenue while reduce the cost of sales, finance. So Dirt Bikes should invest in the projects.

The function of Web site:

- Customers can directly order Dirt Bikes' products over the Web

- Dirt Bikes can offer the service on the Web

- Clients can compare the price on the Web through linking to other Web or system

- Customers can communicate each other on the Web

Chapter 5 Development a Web Site Privacy Policy for Dirt Bikes

Data of visitor collected by Dirt Bikes from Web Site:

- Name, gender, address, age, location, interest, incoming, purchase power, years of riding

Kind of information for Dirt Bikes by tracking visitor's activities at its Web site:

- Kind of products in which end users interest

- Quality of parts

- Requirement of end user

Value to Dirt Bikes

- How to improve the quality of products by found the amounts of parts sold over Web

- Understand the trend of market

- Assistant design and engineers to improve the products

- Get the correct market information to help Dirt Bikes make right decision to develop new products

- Lock target market

- Find the new business opportunities

The privacy problems raised by collecting such data

- Some employees maybe leak the information for personal purpose.

- Break down the freedom of people

- Use opt-in or opt-out to get information

Cookies' advantage to Dirt Bikes and web site' visitors

- Dirt Bikes should use cookies as a tool to track visitors for gathering the information

- Advantage to Dirt Bikes

- Understand what the visitors have done before

- Customize its contents for each visitor's interest and assist Dirt Bikes to promote its products

- Develop detail consumer profile by information

- Create off-line data collected from surveys or paper catalog purchases to develop very detailed profiles of their visitors.

- Save time and cost to find target market

- Advantage to Visitors

- Get the new information in which visitors interest

- Save time

TRUSTe issue: Dirt Bikes should join TRUSTe organization to certify it has adopted approved privacy practices.

- Reason: Make visitors to feel more comfortable while giving out personal information.

P3P issue: Dirt Bikes should design its site so that it conforms to P3P standards. P3P gives users more control over personal information gathered on Web sites they visit. Users can use P3P to select the level of privacy they wish to maintain when interacting with the Web site.

Opt-in or Opt-out issue: Dirt Bikes should adopt an "opt-in" model of informed consent. Business is prohibited from collecting any personal information unless the consumer specifically takes action to approve information collection and use. With "opt-in" method, privacy argument can be minimized.

Chapter 6 Analysis the Total Cost of Ownership

of Dirt Bikes' Hardware and Software Assets

Figure 6.1 lists the price of all computers from IBM, COMPAQ and DELL.



6794F10 NMSO*NVM41 P4/1.4 40G ETH-INT CDROM 2000PRO $1,991.10

830321U NETVISTA M42 SFF P4/2000 256MB 40GB 48X ETH WXPP $1,263.59

831343U NETVISTA A30 P4/2400 DT 256MB 40GB CD ETH WXPP $1,085.77

830525U NETVISTA M42 DT P4/2000 256MB 40G 48X ETH SC WXPP $1,347.50


SR1030NX 2.167GHz storage with a huge 160GB hard drive and connectivity with a modem $899.99

SR1010NX Celeron 2.7GHz Computer features 256MB DDR memory, 80GB hard drive, 48X CD-RW, integrated graphics, 56K v.92 modem and 10/100 Ethernet. $799.99

S6700NX Intel Pentium 4 Processor 2.80GHz with HT Technology $1,299.98


-160GB Ultra DMA Hard Drive

-DVD writer & CD writer combo drive (DVD+RW/CD-RW)


Dimension 2400 Intel Pentium 4 processor at 2.80GHz;256MB shared DDR SDRAM at 266MHz;17" (16.0"vis) Monitor;120GB Ultra/ATA 100 Hard DriveIntegrated Intel Extreme 3D Graphics $999.99

Dimension 4600 Intel Celeron processor at 2.40GHz;256MB shared DDR SDRAM at 266MHz;17" (16.0"vis) Monitor;100GB Ultra/ATA 100 Hard Drive;Integrated Intel Extreme 3D Graphics $1,599

Hewlett Packard LJ101 Laser Printer Print Resolution/Quality - Black:Up To 1200 dpi, Output Paper Capacity:100 Sheets Compatibility: Win98/ME/2000/XP, Mac Power PC G3-OS9/10 $299.99

HP Color LaserJet 1500L Color Laser Printer, 16 ppm black and 4 ppm color, 600 x 600 dpi, ImageREt provides 2400 dpi, 16 MB RAM, Connects via USB, Optional Networking, Mac & PC Compatible $694.99

8 copies of Microsoft Office XP and Lotus SmartSuite $499.99*8= 3999.92

Hardware acquisition: The cost of computer hardware equipment, including 8 Compaq SR1030NX desktop systems (monitor, computer, and keyboard).

899.99*8*1.145(plus tax) = 8243.9 CND

Software acquisition: Including 8 copies of Microsoft Office XP and Lotus martSuite.

499.99*8*1.145(plus tax) = 4579.9 CND

Installation fee: one-time installation represents 10% of initial hardware and software purchase costs.

(8243.9+4579.9)*10%=1282.38 CND

Training fee: one-time training will cost 10% of initial purchase costs.

(8243.9+4579.9)*10%=1282.38 CND

Support: annual technical support will cost 30% of initial purchase costs.

(8243.9+4579.9)*30%=3847.14 CND

Downtime: annual downtime causes the system to be unavailable for processing and user tasks have 15% of purchase costs.

(8243.9+4579.9)*15%=1923.57 CND

Total cost of ownership of Dirt Bikes' new desktop systems over a three-year period: Installation fee + Training fee + Support + Downtime

8243.9+4579.9+1282.38+1282.38+3847.14*3(year)+1923.57*3(year)=32700.69 CND

Chapter7 (See the content in disk)

Chapter 8 Using Telecommunications Technology to Reduce Corporate Travel Expenses

Figure 8.1

Dirt Bikes use website, e-mails, online instant messenger system with distributors, videoconferencing technology, and Wide Area Network as alternative choices for managers who would likely find more efficient and cost- effective ways of keeping in touch with people inside and outside the company. Figure 8.1 illustrate the way connecting between employees outside or inside office and manager inside office.

Figure 8.2

The above Figure 8.2 shows the way for design and engineers to take the long distance training

Figure8.3 Dirt Bikes has a conference with people outside Dirt Bikes

Users Substitute Application

Designers & Videoconferencing Take training by e-learn & distance learn on

Engineers technology the real time

Sales & Web Site, e-mail, online Communicate with clients, keep in touch staffs

Market instant messenger system outside office

Wide Area Network, make presentation by e-learn,


All staffs VoIP, personal service contact people inside or outside office


- To save cost of travel by Designers and engineers who can obtain training program through CD-ROMs (e-learning) and distance learning

- To save cost of sales by Salesman who can promote Dirt Bikes' products online and negotiate with interesting buyers and distributors with online messenger


- Reduce salesmen' travel through videoconferencing to deal with distributors far away

- Save costs of market by e-mail as tool to promote products

- Reduce the amount of printing broaches by posing it on Web site

- Quickly get the sales data through Wide Area Network that link distributors' data system without travel to meet distributors

- Save cost of communication inside office by VoIP without fees

- Eliminate the cost of telecommunication while people is outside office by using PCS with less charge than it of telephone

All amount are in US dollar base

Item Price (US$)

Purchase Install using

High speed Internet- Business package- 52.95

Professional videoconferencing system 4000 350

Dell dimension 2400 desktop computer with 537

17inch monitor and speakers

Build a company website 10,000

Instant messenger system Free

E-mail Free

VoIP technology 250 100 / set.

Sprint PCS(includes 300 minutes free airtime and free long distance nationwide) 35/month

Instant messenger Free

Chapter9 Using Internet Tools to Increase Efficiency and Productivity

Dirt Bikes can use the existing internet access to reduce the cost. Currently, a lot of new technologies were applied in internet to enhance the capacity and effectiveness of Internet that offer multiple ways to individual and low-cost communicate with others, such as e-mail, Usenet Newsgroups, LISTSERV, Chatting, Telnet and Internet Telephone. Dirt Bikes should install multiple internet communication methods for different departments to meet their different purpose. (See Table 9.1)

Table 9.1 Application Internet to obtain the benefit to employees in Dirt Bikes

Internet Tools User Benefit

E-mail All employees Easy communication each other and with distributors, suppliers and customers. Quickly responds to customers. Low cost.

Enhance the efficiency of productivity..

Usenet Newsgroup Sales and Marketing Share the information and ideas on

Design& defined topic with outside people.

Engineering Get useful information from specialists from everywhere to assistant them to design Low price products

LISTSERV Purchase, Sales & Same as above

Marketing, Design &


Chatting PurchaseSales & Increase effectiveness and efficiency of

Marketing, productivity.

Design & Engineering Enhance the effectiveness & efficiency of products, Reduce the cost of products

Intranet All employees and limited Free promotion products

access to distributors, To employees to find one-shopping

suppliers & customers for all kinds of knowledge

Search engine All employees Quickly find the solution way and information from outside resource

Chapter10 Identifying Opportunities for Knowledge Management as Dirt Bikes

- The most important knowledge assets in Dirt Bikes:

The experience on racing and engineering background of many employees, including two founders

- Functions and employees positions are responsible for

- CreatingCEO, managers, design, engineers,

CEO is responsible for making or creating the culture and strategy. IT people. Create knowledge system is most value to him.

Designers, developing new products, can provide the feature of their products to sales and market people to easily and correctly promote products. Share knowledge system is most value to them

Engineers find suitable equipments and parts to fulfill the purpose. Capture and codify knowledge system is most value to them.

IT people apply new information technology to increase the effectiveness and efficiency of productivity, assist other department to enhance their performance. Share knowledge system is most value to them.

Salesmen and marketing people attract potential clients through their performance on the racing and experience to increase the brand name of Dirt Bikes. They will issue the information about trend of market, competitors, requirements from end users to company. Share knowledge system and distribution knowledge system are most value to them.

Service people offer the best service to customers to increase their satisfaction with Dirt Bikes and issue feedback to design to understand what they should produce to customers. Capture and codify knowledge system is most value to them.

- Internet for knowledge management knowmgt_bhavani.pbf are offer service to help customers researching, analyzes on knowledge management through intranet and internet. Also they will assist customers to set up IT system to apply it. Dirt Bikes needs this kind of team to assist it to understand what information system it need, how to use IT for successful share it among all people.

Chapter11 Analyzing the impact of Component Price Changes at Dirt Bikes

Extended cost of each component and total cost for each brake system (See Figure 11.1)

Bill of Materials: Moto 300 Brake SystemFigure 11.1

Component Component No. Source Unit Cost Quantity Extended Cost

Brake cable M0593 Nissin 28.81 1 28.81

Brake pedal M0546 Harrison Billet 5.03 2 10.06

Brake pad M3203 Russell 27.05 2 54.1

Front brake pump M0959 Brembo 66.05 1 66.05

Rear brake pump M4739 Brembo 54 1 54

Front brake caliper M5930 Nissin 106.2 1 106.2

Rear brake caliper M7942 Nissin 106.78 1 106.78

Front brake disc M3920 Russell 143.8 1 143.8

Rear brake disc M0588 Russell 56.42 1 56.42

Brake pipe M0943 Harrison Billet 29.52 1 29.52

Brake lever cover M1059 Brembo 2.62 1 2.62

Total: 658.36

Sensitivity analysis to show the impact on total brake system material costs:

658.36 Brake pipe

Front brake caliper 27 28 29 30 31

103 652.64 653.64 654.64 655.64 656.64

104 653.64 654.64 655.64 656.64 657.64

105 654.64 655.64 656.64 657.64 658.64

106 655.64 656.64 657.64 658.64 659.64

107 656.64 657.64 658.64 659.64 660.64

Total material cost for one Moto 300 motorcycle

2,194.53 Brake pipe

Front brake caliper 27 28 29 30 31

103 2175.47 2178.80 2182.13 2185.47 2188.80

104 2178.80 2182.13 2185.47 2188.80 2192.13

105 2182.13 2185.47 2188.80 2192.13 2195.47

106 2185.47 2188.80 2192.13 2195.47 2198.80

107 2188.80 2192.13 2195.47 2198.80 2202.13

Chapter 12 Designing an Employee Training and Skills Tracking System for Dirt Bikes

Dirt Bikes' problem and a system solution:

- Problem: There is too frequent moving-on among young employees in Dirt Bikes, while Dirt Bikes pay lot of money to train them.

- Impact on

- Organization:

Cause the shortage of staffs in some department

Increase Human resource department' job who should find people to take their shoes

Decline the efficiency of productivity, because new employees should get enough training to individually do the job

Cause some employees' satisfaction with their jib and company to follow it

- Management:

Change the company policy - managers will decrease the amount of training cost

Set up new strategy about training -- ask employees offer minimum working years if they take training paid by company

Delay job - can not finish on time


- Set up human resource database to record the employees training to track their education that assist human resource people to quickly find suitable employees to fill the vacant position. ( see database design)

- Management: Make a new training policy that employees should service Dirt Bikes for three or five years based on the amount of payment for training if they take the program

- Organization: Suggest team work, train people to learn multiple jobs

- Set up relationship with some consultant companies that keep more information about applicators.

Chapter13 Analysis the return on Dirt Bikes' New System Investment

Year 0 1 2 3 4


Database 26,500 1,000 1,000 1,000 1,000


maintenance & support 3,000 3,000 3,000 3,000 3,000

Total Cost 29,500 4,000 4,000 4,000 4,000 45,500


1.employees recruiting costs 11,000 11,000 11,000 11,000 11,000

2.increase the effectiviteness in HR staff 3,950 3,950 3,950 3,950 3,950

Total Benefit 14,950 14,950 14,950 14,950 14,950 74,750


Net Cash Flow(not including orig. investment) 14,950 10,950 10,950 10,950 10,950

Net Cash Flow(including orig. investment) -14,550 10,950 10,950 10,950 10,950

(1) Net present value 21,717

Present Value 51217

Initial investment 29,500

(2)Accounting rate of return

(total benefit-Total Costs-Depreciation)/Use life Total Benefit 74,750

--------------------------------- Total Costs 45,500

Total initial investment Depreciation 29,500

total benefit-Total Costs-Depreciation -250

Life 5 years

Initial investment 28,500

ROI= (-250/5) -0.17%


(3)Internal Return

Present Value 27,428 0.93

Initial investment 29500

(4)Cost-benefit Ratio Total Benefit 74,750 1.64

Total Costs 45,500

(5) Profitability Index Present Value of cash flow 51217 1.74

------------------------ 29500

Initial investment

Cumulative Cash Flow

(6)Payback Period = 2.7years Year 0 11,000 14,950

Initial investment = 29,500 Year 1 10,950 25,900

Year 2 10,950 36,850

Year 3 10,950 47,800

Year 4 10,950 58,750

Chapter14 Development a Disaster Recovery Plan for Dirt Bikes

- The most likely threats to operation of Dirt Bikes' system:

- Personal failure: Because employees' wrong operating to cause the system to stop.

- Viruses: A lot of viruses will be more quickly spread today

- Dirt Bikes' most critical systems: suppliers chain system

- Dirt Bikes' parts are from around the world that normally needs more long lead time, for instant: Rotax engine from Australia should use 2 or 3 weeks to arrive in Dirt Bikes by sea. Once this system stops running, Dirt Bikes will loss communicating with supplier. Any delay parts can cause manufacturing stopping, by which Dirt Bikes can loss order and money. Dirt Bikes could survive for 2 weeks if it is down

- Financial system: It records all data about payable account and receivable account. When this system is failure to loss data, Dirt Bikes will loss any evidences to follow up the payment that make Dirt Bikes losing money.

- The above two systems and sales system are the most important to back up and restore in the event of a disaster.

- Disaster recovery services:

- Info-tech research group

This company offers several services to customers:

1. Offer several total package-service to help some customers doing on:

physical security , critical services , passwords/usernames and account policies

Internet use, e-mail and anti-virus deployment , backup data storage, file storage equipment/system documentation review and etc

The processing includes testing/scan, evaluation/analysis, planning, implement, 24 service. The price is 30,000-65,000US$.

- DreiveSavers Inc

It mainly offers disaster recovery software to customers to recovery the dada with 24 service.

Dirt Bikes should use Info-tech research group as the supplier that can help Dirt Bikes:

- Completely understand what disaster recovery is.

- Analyzes the risk of disaster in special area or factors in Dirt Bikes

- Defines the impact of potential disaster on Dirt Bikes.

- Assist Dirt Bikes to control the cost.

- Complete a tolerance analysis to determine Dirt Bikes' ability to tolerate downtime. This is required in order to prioritize actions.

- Create a prioritization list. Determine which pieces of the network (hardware) and which applications and services must be restored first in the event of a disaster.

- Define hot/cold site requirements.

- Develop key contact and organizational chart. This is the order of personnel contact in the case of emergency. Included in this list are the names of vendors, consultants, media, insurance, and other stakeholders who would need to be notified.

- Organize recovery teams. Divide the recovery process into various objectives and create teams who will be responsible for meeting these objectives. Identify the various roles and responsibilities of each recovery team.

- Review plan with Dirt Bikes. Update plan based upon feedback and receipt of final plan acceptance.

- Develop Test Scenarios

- Publish and sign-off the Disaster Recovery Plan.

- Produce hard copies, CDs, and (potentially) remote server locations of the plan.

Chapter 15 Creating a Global Web Presence for Dirt Bikes

- Per capital incoming in many countries has steadily been increased recently. Dirt Bikes should pay more attentions to these countries, because motorcycle is consuming goods. The potential market must be in higher per capital country. Dirt Bikes will get high return if they can focus on expending into this area with right decision.

Table 15.1 list the incoming in some countries

Country Per capital incoming ( US$ )

Sweden 12390

German 10012

Italy 8914

Japan 5644

Canada 5011

Austr alia 4262

Spain 2710

Taiwan 1597

China 207

Per capital incoming in China is still low, but in some cities, it is more high, such as Beijing and Shanghai. Dirt Bikes should try to enter into development countries for future.

Increase international revenue by internet

- make a global strategy of information system

- Internet is more popular around world, especial in above counties. Dirt Bikes should utilize this tool to attract new clients and enter into new international market fast.

- Dirt Biks should open offices in these areas that will help company to find potential customer's information by internet.

- Dirt will lock target market in this local to promote its products

Feature to put on Web site:

- Search engine

- Information about Awards gained before

- Information about racing event

- Local Language translation feature

- Currency conversion

- Delivery, purchase, and warranty policies

- Broaches about the products